NVIDIA dropped below its important $200 support level on Thursday, falling 2% in early trading. This came even after a brief premarket rise following Micron’s strong earnings. The stock closed at $199 on Wednesday and has had trouble staying above $200 since it first crossed that mark in April. Here’s a look at what’s affecting Nvidia and whether the growing competition in the AI chip market is as serious as some investors think.
Thursday’s drop was mainly caused by several new AI chip announcements this week. OpenAI introduced a custom AI chip made with Broadcom, and Qualcomm announced new data center supply deals with Microsoft and Meta Platforms. These deals do not mean Nvidia is losing current business. Its graphics processing units are still the top choice for many AI tasks, and several major tech companies have already said they will use Nvidia’s next-generation Vera Rubin hardware when it goes into full production later this year.
The main worry is about the future. Every new custom chip deal or supplier agreement could mean less future AI spending for Nvidia. Investors want proof that Nvidia can keep its market share as more companies use different types of AI hardware. Until there is clear demand for the Vera Rubin chip, the stock will probably stay flat or face more pressure.
The stock’s valuation still looks solid. NVIDIA trades at less than 20 times its expected earnings, which is cheaper than the S&P 500 overall. The company also plans to return over $97 billion to shareholders in 2026 through dividends and buybacks. These factors should help keep the stock from falling much further, even if worries about competition continue.
